Has your home’s value increased significantly?
Use it to achieve your financial goals
Over the past 18 months, home values throughout the Greater Philadelphia and Delaware region — and the country — have increased drastically.
Fueled by stilllow interest rates and the desire for living arrangements with more space has led to homeowners and first-time homebuyers alike searching at a feverish pace to acquire the house of their dreams.
As a result of these forces, prices for homes have skyrocketed, and while appraised values may not reach potential selling price levels, homeowners looking to stay put have a unique opportunity to maximize their investment.
Here are some options for homeowners to cash in on their home’s rising value.
Cash out refinance
If you want to take advantage of the equity you’ve built in your home and lower interest rates, a cash-out refinance is a great option. A cash-out refinance replaces your current mortgage with a larger one — at the lower interest rate — and gives you access to the cash that makes up the difference between the two mortgages.
You can then use the cash for whatever you need, such as a home remodel, consolidating higher interest debt, paying for a child’s college expenses, or other investments in your financial future. The cash is yours, and so is the choice of what to do with it.
Traditional refinance
Happy with your home just as it is? Great!
Now is still a great time to refinance. With low rates and recently lifted fees for refinancing some types of mortgages, you may be able to significantly reduce your monthly payment and overall cost of your home in the long run with a mortgage refinance.
No-closing-cost refinance
Most times, a refinance will have some up-front fees to cover expenses such as appraisal and title fees and insurance.
With a no-closing-cost refinance, these fees can be worked into your new mortgage, or you can opt to pay a slightly higher interest rate. The no-closingcost refinance is a nice option for homeowners who want to take advantage of the low-rate environment but don’t have the lump sum cash to cover these costs.
Work with your lender to crunch the numbers for each option to maximize your savings over the course of the loan
Tap intoyour home equity options
If you already have a great interest rate but have equity in your home and want to make home improvements, remodel or use the money for other uses, a home equity loan or home equity line of credit (HELOC) can help.
A home equity loan provides predictable, fixed payments for achieving any of your financial goals, whether its reinvesting into your home or using the money for something else while maintaining financial flexibility.
If you prefer to use your equity like a revolving credit line over a long period of time, then a HELOC may be an option. A HELOC provides a variable interest credit line with access to funds for up to 10 years (the draw period) with up to 20 years (the repayment period) to pay back the loan.
Whichever route you take, using your home’s value to improve your finances now and in the future is a great option for many homeowners. Your work hard for your home, and it is likely the largest purchase you will ever make, so look for ways to make your investment work for you, too
Jeffrey M. Ruben joined WSFS through its acquisition of Array Financial, a full-service mortgage banking organization, and Arrow Land Transfer in August 2013. Jeff formed Array and Arrow in 2005, having previously held senior executive roles at financial and legal institutions.